President Bush’s new $3.1 trillion budget faces a cool reception in Congress even as it bears all the trademark stamps of his eight-year tenure: signature tax cuts, costly commitments overseas and a growing national debt at home.

Democrats didn’t hide their displeasure Monday: “It’s the death grip on the future,” snorted House Transportation Committee Chairman James L. Oberstar (D-Minn.). Governors and the hospital lobby are sure to be angered. And Republicans concede the whole exercise could prove a bridge to political nowhere in a city already looking past the November elections.

But the massive four-volume document — delivered via the Internet for the first time — is nonetheless an important capstone to the Bush presidency and a roadmap of sorts to the huge fiscal challenges facing his successor.

Defense and foreign aid again dominate new spending, a $41.3 billion increase that would consume most of the new appropriations allowed for the fiscal year that begins Oct. 1. Learning from mistakes in Iraq, Bush would use the money to expand the Army and Marine Corps while also adding hundreds of new positions to the State Department as part of a civilian stabilization corps to build on the military’s nation-building efforts overseas. But to help make room in his budget — and still save his tax cuts — he then cuts federal aid to states and demands $195.6 billion in five-year savings from Medicare and Medicaid programs for the elderly, poor and disabled.

In the process, his budget takes on the National Governors Association as well as the powerful hospital lobby. Just weeks ago, the NGA was denied in its request to add state aid to the economic stimulus bill now pending in Congress. Now the Bush budget proposes to cut almost $13 billion from federal discretionary grants to states and local governments.

In the case of Medicare, about $5.7 billion of Bush’s savings would come at the expense of higher-income elderly who would be asked to pay higher premiums, but the lion’s share falls on health care providers by denying cost-of-living increases. Hospitals already argue that they lose money under the existing Medicare payment schedule, and Chip Kahn, president of the Federation of American Hospitals, said the proposal is “misguided” and “short-sighted.”

Central to all these assumptions is Bush’s desire to preserve his income tax cuts — including lower rates for capital gains and dividends — due to expire after 2010.

As he prepares to leave office, the president is saying the nation can have both — renewed tax cuts and a balanced budget by 2012. But this optimistic projection skips over back-to-back $400 billion-plus deficits projected for 2008 and 2009, and his calculations evoke memories of David Stockman’s famous “magic asterisk” — a term embraced by Ronald’s Reagan’s budget wunderkind to mask difficult decisions in the 1980s.

Not only are many of the proposed savings very questionable politically but Bush proposes to leave office without fully accounting for the future costs of the Iraq war. Nothing is budgeted for military operations in Iraq or Afghanistan beyond a $70 billion request for 2009. That’s less than half of what is expected to be spent by the end of this fiscal year, Sept. 30, and the legacy costs of the war — whatever decisions a future president makes about U.S. troop withdrawals — could easily wipe off the narrow projected surpluses of $48 billion in 2012 and $29 billion in 2013.

Total domestic appropriations, when compared with this year, face a real cut, but there are clear winners and losers. The Bureau of the Census, National Park Service, National Science Foundation and favored education programs all get new money. And given the deep divisions in his party over immigration reform, Bush continues to pump money into border security together with $450 million for Mexico as part of the new Merida initiative to fight drug trafficking along the U.S.-Mexico border.

At the same time, the National Institutes of Health is denied even a cost-of-living increase, and the Indian Health Service, forest and transportation programs face real cuts below this year’s funding.

Mindful of this year’s battle over his No Child Left Behind education reforms, Bush includes $14.3 billion for Title I grants in the new fiscal year that begins Oct. 1, an increase of $406 million targeted to public high schools. Reading First grants to states would more than double to $1 billion, a new Math Now program is added and federal aid to help communities cope with the high cost of mandated special education programs is increased by $337 million to $11.3 billion.

But the rising cost of Pell Grants for low-income college students forces deep cuts elsewhere to meet the budget goal of holding Education Department funding at $59.2 billion. About $3.3 billion would come from eliminating 47 programs, including $1.2 billion for vocational and technical education programs.

The Democratic-backed “Voc Ed” programs have been a Bush target before, but this year, the cuts go much further and are combined with a wholesale consolidation of related job training and dislocated worker programs in the Labor Department.

Arizona Sen. John McCain, now the leading contender for the Republican presidential nomination to succeed Bush, has emphasized the importance of retraining funds for workers. But Labor’s new $2.8 billion, more voucher-styled Career Advancement Account would provide less money than the four major programs it would replace — a reduction of more than $200 million.

Democrats are sure to resist, and given Bush’s lame-duck status, Congress could very well ignore his budget entirely and punt major decisions into next year, when a new administration will have taken power. One scenario already being discussed calls for trying to complete a handful of spending bills by September but then pass a stopgap four-month measure for the remainder so the budget can be revisited in January, when Democrats hope to have the White House.

Release of the budget came shortly after a dramatic rainbow arched over Washington, with the sun rising from the Capitol. But the whole process has taken such a beating in recent years that it seems a shadow of what it once was. And Bush’s renewed emphasis on Medicare and Medicaid savings is a reminder of how, in the opinion of many Republicans, he squandered his best chance to address these costs in 2006.

“It’s a pro-forma budget on their part,” said New Hampshire Sen. Judd Gregg, the ranking Republican on the Senate Budget Committee. “They used a lot of gimmicks.”